This year has seen a minor contraction in Russian commercial property value. Cushman and Wakefield has released figures indicating that the expected volume of investment is expected to reach approximately $7.2 billion (€5.5 billion) by the end of the year, which is five per cent less than the total for 2011.
Moscow is a popular location for European investors
The retail sector led the way in 2012, accounting for over 45 per cent of the total volume of sales. The office sector came in at about 30 per cent, with hospitality following at 15 per cent. The warehouse and industrial sectors accounted for seven per cent of the total sales volume for the year.
Moscow is the third largest investment market in Europe. (London and Paris are the top two cities for commercial property investors, according to Real Estate Capital Analytics.) St. Petersburg is another active market in Russia. Investors are less likely to consider buying properties in what they consider to be riskier regional areas.
St. Petersburg was ranked at No. 14 among European property markets by RCA. The Galleria shopping centre transaction was largely responsible for its placing so high on the list.
This single sale was the largest transaction in the Russian market this year. The city itself has limited investment capacity due to the lack of quality properties on the market. Investment volumes are expected to remain in at similar levels over the next few years.
Capitalization rates for prime properties have remained stable throughout 2012 and are currently sitting at 8.75 per cent for offices and 9.25 per cent for retail properties. The rate for hospitality properties is 9.5 per cent. For warehouse and industrial properties, it is 11 per cent. No major changes are expected in the New Year.
